USA Rare Earth starts Serra Verde shipments as cash burn jumps

What happened

USA Rare Earth, Inc. (NASDAQ: USAR) booked $3.0 million of third-quarter revenue and its first commercial magnet sales. Its operating loss widened.

The company closed its combination with Serra Verde on Sept. 3. Serra Verde began commercial-scale shipments in October and recorded sales in November. For a holder, the quarter shows product reaching customers alongside a much larger loss.

In September the company sold the first magnets from its Stillwater, Oklahoma plant, which can make 600 metric tonnes of magnets a year. The first sales were sintered NdFeB block magnets sold to a high-performance materials manufacturer.

The Serra Verde offtake

Serra Verde ships heavy mixed rare earth carbonate to US SIIE, LLC under a 15-year, 100% take-or-pay offtake agreement. US SIIE is a U.S. government-backed special purpose vehicle. It will buy all of Serra Verde's Phase 1 production.

The company announced in August that the vehicle was capitalized at $1.55 billion. That includes a $750 million investment from the U.S. Department of War, $250 million more than first contemplated.

It also includes a commitment letter for a revolving credit facility of up to $500 million. A U.S. government forward purchase contract of at least $300 million over five years is part of the package too.

The offtake agreement prices the carbonate off non-China prices. The company says recent non-China prices are 14 to 16 times China prices for dysprosium oxide and 6 to 8 times for terbium oxide.

For the fourth quarter, the company expects Serra Verde sales volume of at least 325 tonnes of total rare earth oxides. Quarter to date, the basket is worth $43 per kilogram at floor prices and $97 per kilogram at market prices, after contracted separation costs.

Where the cash came from

Financing, not operations, supplied the cash. Cash, cash equivalents and restricted cash rose by $803.67 million to $1.16 billion over nine months, from $359.93 million on Dec. 31, 2025.

Net cash from financing was $1.41 billion, against $275.33 million in the first nine months of 2025. That includes $1.5 billion of PIPE stock proceeds before $51 million of issuance costs.

The cash is being spent. Operating activities used $219.01 million, up from $21.09 million a year earlier. Investing used $384.84 million, including $191.19 million for the Serra Verde acquisition, net of cash received.

The share count grew too. Weighted-average diluted shares were 284.92 million in the third quarter, against 102.59 million a year earlier.

The operating loss and the one-time gain

Net income attributable to USA Rare Earth was $11.71 million in the quarter, against a net loss of $156.68 million a year earlier. The profit does not come from operations.

Other income, net was $148.05 million. The company's reconciliation backs out a $136.57 million gain on the fair market value of financial instruments. A $5.10 million income tax benefit also helped.

The loss from operations grew to $141.44 million from $15.86 million. Cost of revenue was $22.88 million, leaving a gross loss of $19.88 million. Selling, general and administrative expense rose to $103.66 million from $11.41 million. The adjusted net loss was $125.64 million, up from $25.60 million.

Why it matters

OptimistFi has argued that USA Rare Earth works only if strategic relevance becomes qualified commercial production before cash burn and dilution overwhelm owners. This quarter moves the first half forward with take-or-pay shipments and magnet sales. The loss and the share count press on the second.

The release says its capacity figures are nameplate or targeted capacity, and actual production may be materially lower. It also lists the risk that the offtake buyer is not well enough funded, including if final debt financing is not done within the agreed timeframes.

More spending is ahead. The Blacksburg, South Carolina metals and magnet plant, which broke ground in September, is described as an approximately $1.2 billion investment.

What's next

The nearest dated target is finished magnet prototype sales to multiple customers from Stillwater by the end of 2026. Delivery would show demand beyond the first materials manufacturer. A miss would weaken the magnet side of the case.

In 2027 the company targets publishing the Serra Verde SK-1300 report in the first quarter. In the second quarter it targets completing the Stage 1 ramp to a 4,000 tpa total rare earth oxide run rate.

It targets 6,400 tpa by the end of 2027. It also plans to commission Line 1b at Stillwater in the second quarter, for total magnet capacity of 1,200 tpa.